How to determine your intellectual investing style?
I’m an incoming analyst at an EB, and I worked as a generalist in M&A/RX/Coverage last summer. I know I eventually want to become an investor. For people who were in my shoes, how did you think about which style of investing would be best for you? I’ve heard discussions about the differences in wlb/lifestyle between Growth/Buyout/Turnaround PE, but I’m instead more interested in how you knew (or came to find out) what you intellectually align with and would therefore be most likely to succeed in.
Any thoughts at all would be helpful. Thanks!
I've given this question a good many years of thought, and I've decided that it comes down to temperament above all. As echoed by Buffett and his associates often. It makes sense intuitively - good investing comes down to sticking to a compound rate over long periods of time. What else can determine your gut to stick to your plan, other than your temperament, and belief in your methods?
These are some common personality traits of value investors by the Program Director of the Value Investing Program at Ivey, which I agree with, although might be cliche. Value investors have to be cold, calculating, patient, and measure their value by their own yardsticks and not of others.
Then, there's this intro by Aswath Damodaran on the lay of the land of investment philosophies and choosing one for yourself, and why it's so important to have a philosophy. I thought this was very informative.
https://www.youtube.com/playlist?list=PLUkh9m2BorqlDJlnBXUaJaMRNE7UDckn6
Then there's this entire class by Aswath on investment philosophies, all for free. I finished about half of it but decided it was too elementary, but the few general guidelines on investment philosophies are very important.
Finally, over-intellectualizing the investment process can be risky or counter-productive. You're not an academic, you're not a business school professor, you're here to make money or learn how to do it. The person standing on the shore of the pool studying intensely how people swim is 10x better off just jumping into the pool. The way I slowly found my way was by getting hundreds of reps in, noticing a pattern in the names I consistently made money in, and slowly starting to systematize the investment process. Importantly, JOURNAL your investment process and you have to stay intellectually honest (did you make money because your thesis was correct, or did you just get lucky and in fact took a bad risk)
What does the journaling process look like for you?
At the bare minimum I journal my thesis for every name I pitch, attribute probabilities for a sensitivity analysis. Important to do this cuz hindsight bias is a massive bitch if you have ntg objective to hold yourself accountable.
The rest can range from making calls on macro, how the markets are doing, and adding ideas and bits and pieces to my investment philosophy.
Very helpful explanation. I am at a stage where I’m trying to learn what my investing style is. Commenting to remind myself to watch these lectures this week.
Low patience / If you like public markets = HF
Medium patience / If you like market sizing and networking = Growth / VC
Medium patience / If you like modeling and diligence = Buyout PE
High patience / If you like fixing broken businesses = Turnaround
Unironically reading WSO has helped me a lot
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